This Episode, #24 , is another “bonus” episode that is a little less formal than usual episodes. Again, I hope you can forgive the more casual style and above all the lower audio quality – this was another episode squeezed in between visits to relatives and loved ones!
The start of a new year is a natural point at which to think about big-picture strategy and overall approach to business and business building. If you like this approach, let me know in the Facebook Group and I’ll give more summaries of powerful business strategy books I’ve been reading.
This episode is about The Star Principle, as espoused by the wonderful business strategist, Richard Koch (who is a fellow Brit!). This principle is behind Richard going from £3 million to above £150 million in net worth, with 8/16 investments making money, one with an astronomic return! (venture capitalists expect 1 in 10 to make money). This is almost unheard of – this guy utterly walks his talk!
SHOW NOTES FOR EPISODE #24 -Richard Koch and The Star Principle
American Amazon strategists mentioned:
Jason Fladlien was (and probably still is) the biggest single affiliate seller of Amazing Selling Machine
Ben Cummings was a star student of Amazing Selling Machine as sold by Jason Fladlien. He now works with Jason and runs his own courses, masterminds, etc.
Go after markets where there is an upward trend overall
Reviewing/Reflecting on your own business
Once you have had a product or products live for a time, review your products. Aim: Determine whether you have found a Star, Cash Cow, Question Mark or a Dog!
Monitor your position on Amazon in response to main keywords for your product(s).
If you aren’t yet within the top 4-6 positions for the most important KWs:
give away product until you have at least 50% of the reviews of the no. 1 or 2 player
spend aggressively on Amazon ads in launch phase BUT monitor profitability like a hawk so you know what the breakeven price will be.
Try to be as differentiated as possible in title, photos and bullet points (main photo is the no.1 thing!)
If you are within that, aim for no. 2 or no. 1 on main keyword
Above all, focus on being no. 1 for any keyword that has a certain amount of demand and is profitable!!
#6 in main market is nice; #1 in a niche is better IF it is still profitable.
Aim to be the dominant player in your product niche, however small
If you can’t get onto page one after aggressive promotion, could it be that you have a Dog?? If you have, discontinue the product:
Reduce Amazon ad spend to a minimum. Discontinue Facebook Ads, Google Ads etc. if used.
Don’t order any more inventory
If you need the cash back out to invest in a product that has proven to be a Star or a Cash Cow, consider lowering the price to sell out faster and get the cash back out faster.
After your launch phase (so you have hit 50% of the no. of reviews of the No.1 product and have got onto page 1 for top 2-3 keywords), scale back costs so you make profit!
Amazon ads are often the no.1 place to cut back
ACoS under 100% does NOT mean you’re making gross profit!! ACoS needs to be substantially less than the gross profit margin. E.g., if your gross margin is 33%, ACoS MUST be under 33% to be making a profit.
Don’t rely on ACoS; add up all your amazon costs INCLUDING AMAZON ADS for a particular period; add up all the amazon sales for the same period – and determine gross profit and loss
A star business or a cash cow should have decent profit margins after launch phase.
If it’s only breaking even, see if you can reduce your costs. Above all, monitor and reduce your spend on Amazon Ads!!
If it still won’t be profitable, consider discontinuing the product
Four formulas to stay a star business (these need to be discovered and turned into routine and repeatable sytems):
Customer Attraction Formula (to ever more customers and ever more sales)
Commercial Formula (to lock in fat margins)
Delivery Formula (to deliver consistent, high quality products)
Innovation Formula (to stay ahead of rivals)
These are things that at first you probably can’t neatly formulate – but you should be using your experience to build these formulas over time and then refine them based on reality, not theory!
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